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March 3 --New Environmental Protection Agency regulations unveiled March 3 will cut sulfur in gasoline and strengthen vehicle emissions standards, which states have said are necessary to meet air quality standards for ozone and other pollutants.

Automakers also have pressed the EPA to issue the Tier 3 rule and said the newly released federal regulations now are harmonized with California's existing standards, which will let them produce cars under one national program.

Refiners have been the rule's most vocal critics, and although the EPA said it included provisions in the final rule to give refiners compliance flexibility, the American Petroleum Institute said March 3 the final regulation still will be costly and unnecessary.

The EPA said the final rule will cost $1.5 billion per year when it is fully implemented, while the annual health benefits will be $6.7 billion to $19 billion. The agency said the rule will prevent as many as 2,000 premature deaths per year. “The benefits far outweigh the costs,” EPA Administrator Gina McCarthy told reporters during a telephone news conference March 3.

Signature Air Rule for Obama's Second Term

Frank O'Donnell, president of Clean Air Watch, said in a statement March 3 that Tier 3 will be the most significant air pollution rule the EPA releases this year, and it could be a signature air quality rule of President Barack Obama's second term. The rule is expected to help states meet national ambient air quality standards for ozone and fine particulate matter, and George “Tad” Aburn, director of the air and radiation management administration of the Maryland Department of the Environment, who also spoke during the EPA's telephone news conference March 3, said no other pollution control strategy could be as cost-effective at cleaning up the air as Tier 3 will be.

Although states have taken steps to improve air quality in recent years, Aburn said, cars remain a top source of pollution in many areas, and some states will never be able to meet the EPA ambient air standards without Tier 3.

“We have some huge challenges ahead of us, and this rulemaking is critical,” said Aburn, who also is co-president of the National Association of Clean Air Agencies, which represents state and local air quality agencies.

By 2018, the EPA said, the rule will reduce roadway emissions of sulfur dioxide by 56 percent. By 2030, the rule will reduce onroad emissions of nitrogen oxides by 25 percent, volatile organic compounds by 16 percent, carbon monoxide by 24 percent, and fine particulate matter by 10 percent. Ozone forms when nitrogen oxides and volatile organic compounds react in the presence of sunlight.

Sulfur Cuts Begin in 2017

The rule's most immediate effect will begin in 2017, when the EPA will require refiners to reduce the annual average amount of sulfur in gasoline to 10 parts per million, which is down from today's standard of 30 ppm.

The Tier 3 rule follows the EPA's 2000 Tier 2 rule, which reduced sulfur in gasoline to 30 ppm from 300 ppm. In addition to immediately reducing pollution in the air, low-sulfur fuel will help emissions control equipment in new vehicles work more efficiently, Michael Robinson, vice president for sustainability and global regulatory affairs for General Motors, told reporters during the EPA's telephone news conference. The EPA said the gasoline requirement will translate to a cost increase at the pump of 0.65 cent per gallon, beginning in 2017.

Fuel Costs Rise

Refineries, which will be required to remove the sulfur from gasoline, have been the most vocal critics of the Tier 3 rule. The industry said the regulation will be costly, raising fuel costs at the pump by 6 cents to 9 cents per gallon.

McCarthy criticized the API estimate March 3, saying it is based on outdated data. The EPA said it addressed the petroleum industry's concerns by making the rule flexible by giving credits for early compliance, averaging sulfur content nationwide, carrying credits from the existing Tier 2 program, creating hardship provisions, and giving 30 small refineries a three-year compliance delay.

Carlton Carroll, a spokesman for the American Petroleum Institute, told Bloomberg BNA in an e-mail March 3 that the industry doesn't have “any assurance that the supply of credits into the system will be sufficient for refiners that could delay compliance. EPA is essentially saying 'trust us' that there will be enough credits; but their unrealistically low capital costs estimates show they won't recognize how complicated it truly is to implement this rule.”

Timeline Is Rushed, Refiners Say

Bob Greco, downstream group director for the American Petroleum Institute, said in a statement March 3 that the compliance timeline is rushed and “leaves little opportunity for refiners to design, engineer, permit, construct, start up, and integrate the new machinery required.” The EPA said Tier 3 will affect 108 refineries, and 67 can modify their equipment within two years, one needs a new gasoline hydrotreater to be installed within three years, and 40 can already meet the new standard or can purchase credits to comply.

Valero and other Gulf Coast refiners that process heavier, sour crudes may have a harder time complying with Tier 3, and the rule could force refiners to spend as much as $10 billion on facility modifications and engineering work, according to Bloomberg analyst Melissa Avstreih.

In statements March 3, both of Louisiana's senators criticized the EPA rule. Sen. Mary Landrieu (D-La.), chairwoman of the Senate Energy and Natural Resources Committee, called Tier 3 an “ill-advised, overly burdensome regulation.” Sen. David Vitter (R-La.), the ranking member of the Senate Environment and Public Works Committee, said the quick compliance deadline “creates huge financial and regulatory burdens.”

Vehicle Standards Also Strengthened

In addition to the gasoline requirements, the regulation will require phased-in changes to vehicles, including stronger tailpipe and evaporative emissions standards, beginning in model years 2017 to 2025. The cost of the standards will be an average of $72 per new vehicle, the EPA said.

For light-duty vehicles, the EPA estimates the tailpipe standards will reduce non-methane organic gases and nitrogen oxides emissions by 80 percent and particulate matter by 70 percent. For evaporative emissions standards, which are designed to eliminate fuel vapor evaporative emissions, the rule will require a 50 percent reduction.

State, Federal Harmonization Key

Robinson, of General Motors, said the federal harmonization with California's Low Emission Vehicle III program is “a big deal for us” because companies can engineer, build and calibrate vehicles on a national basis.

The rule's compliance timing also coincides with the requirements of EPA's greenhouse gas emissions and fuel economy standards for passenger vehicles, which begin with model year 2017 vehicles. The EPA finalized the Tier 3 rule largely as proposed. However, in one change, the EPA will use fuel containing 10 percent ethanol, E10, as a certification fuel, rather than E15, which the EPA proposed .

Rule Addresses Environmental Justice

The Tier 3 rule has been years in the making. Obama issued a (memo) in 2010 directing the EPA to review the existing standards for sulfur content in gasoline, among other regulations.

McCarthy, who began working on the rule when she was the agency's assistant administrator for air and radiation, before her promotion to administrator, said during the telephone news conference that she is proud of the rule. She said the regulation addresses environmental justice issues because people who live and work near busy roads in urban areas are disproportionately harmed by vehicle emissions.

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